No Dividend Despite Strong Recovery At Newcrest

By Glenn Dyer | More Articles by Glenn Dyer

While South32 was rewarding shareholders with higher dividends, no such joy for shareholders in the country’s biggest gold miners, Newcrest which more than doubled its first-half profit thanks to the continuing recovery at its Cadia gold and copper mine in NSW.

First-half results were also boosted by the weaker Australian dollar in the December half year, which helped control costs at its Australian operations.

Underlying profit for the six months ended December 31 came in at $237 million, up from $116 million a year ago. Sales revenue rose less than 1% to $1.73 billion in the half.

The company also announced an interim dividend of 7.5 US cents per share, the same as last year. The shares though eased 1.3% to $24.98.

Gold production for the half-year climbed to 1.2 million ounces, about 6% higher than last year, while all-in sustaining cost fell 13% to $747 per ounce.

Copper production jumped 33% to 51.8 thousand tonnes as the earthquake-related problems at the Cadia mine in 2017 and 2018 were put behind it.

Underlying profit of $237 million was $121 million higher than the prior period primarily driven by higher gold and copper sales volumes from Cadia, the favorable impact on operating costs from the weakening of the Australian dollar against the US dollar, and lower depreciation expense.

“These benefits were partially offset by lower realised gold and copper prices and higher income tax expense compared to the prior period,” Newcrest said in yesterday’s statement.

The company said it expects total capital expenditure for fiscal 2019 to be around the lower end of the forecast it issued last month of between $590 million and $690 million.

In December, the miner raised its holdings in Ecuador gold and copper developer SolGold Plc, in a move that strengthened its position as the biggest investor ahead of rival BHP Group. SolGold controls one of the biggest and most attractive copper deposits around the world.

Net debt has been cut to $959 million.

CEO Sandeep Biswas, said in a statement with yesterday’s results: “We safely increased production, lowered unit costs, doubled profit and significantly increased free cash flow to further reduce net debt, all in a period when gold and copper prices were lower.

“This is a pleasing, strong result reflecting our commitment to safety, operational discipline and cash maximisation, which shows the value being delivered to shareholders and the platform for growth we have established.”

Barring a surge in gold or copper prices this half, Newcrest looks on track to pay a dividend for the year of 15 US cents which would be in line with its policy to pay a dividend making up 10% to 30% of free cash flow each financial year.

Glenn Dyer

About Glenn Dyer

Glenn Dyer has been a finance journalist and TV producer for more than 40 years. He has worked at Maxwell Newton Publications, Queensland Newspapers, AAP, The Australian Financial Review, The Nine Network and Crikey.

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